Project Sashakt Intercreditor Agreement

« They had discussions and it was fruitful to conclude the agreement between the creditors. It will be live this month, » he told reporters. The agreement, part of the Sashakt project, will be transferred to the boards of the banks concerned and would be approved in a few days, said the non-executive chairman of the GNP Sunil Mehta The project is based on the recommendations of the sunil Mehta commission. In more detail, Mehta said the agreement between creditors was a building block because « we are implementing different options. » Asked whether other banks were satisfied with the concentration of power in the hands of SBI and some other lenders, Arijit Basu, Managing Director, SBI, said it would be premature to comment on the contours of the inter-creditor agreement, since not all lenders are yet involved. At that time, the boards of various banks thought about the agreement, but still to sign, Basu said. « The way we articulated the Sashakt project, it`s really for multi-bank agreements, it`s the whole idea of an inter-creditor agreement, » said GNP official. The ICA also states that lenders would be « bound by the measures and actions taken by the lead bank. » The bankers with whom BloombergQuint spoke checked the draft contract. The agreement between creditors is a framework in which the consortium of lenders would handle the NPA business. He added that the agreement between the creditors would be a legal document and would be enforceable in any court. A former senior public sector banker, who sits on the board of a large private bank, said that private bankers could not fully agree with the concentration of power in the hands of the main lender, but could only further delay inter-creditor agreements. In addition, private sector banks can sell their exposure to another lender within the consortium or to an asset reconstruction company (CRA) to get out of the file if they feel too limited, the former banker said.

As part of the Sashakt project, independent asset management companies (AMCs) and steering committees would be set up to accelerate the replacement of non-performing loans in the banking system. New Delhi: In an early ability to expedite the NPA resolution, bankers on Thursday finalized the framework for the Inter-Creditor Agreement (ICA), which provides for effective communication between lenders. Mehta said the agreement between creditors was a participatory process. An important part of the plan includes all lenders who sign a legally binding agreement between creditors, which transfers most decisions regarding the liquidation of bad loans to the primary lender. Given that SBI is the largest lender in 60% of the most stressed cases, this means that most decision-making powers are focused on this one bank and its team. Two bankers, who spoke to BloombergQuint on condition of anonymity, said the document would give considerable powers to the main lender. Under the agreement, the bankers say it will be legally binding, the main lender will be responsible for the following: the bank will have the freedom to adapt the resolution process. The Lead Bank can discover the pricing by the open route of the auction. Sharp Insight, in-depth stories on more than 20 sectors « The mandatory requirement for an ICA will ensure that resolution efforts can be implemented through the search for appropriate consensus, as unanimity is difficult to achieve and may not be timely. The new framework also offsets the interest of all stakeholders, including lenders who think differently, » he added. Therefore, could a concentration of power in the hands of a few large lenders harm the interests of other banks? .

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